A view of downtown Westcliffe on July 13, 2016. Custer County ranked fifth for its income gap out of 3,064 U.S. counties examined by the Keystone Research Center in Harrisburg, Pa.

Colorado is a relatively egalitarian place, especially when compared with states such as New York, Connecticut or even Wyoming. But it contains some surprisingly high peaks and deep valleys in income inequality.

Pitkin County, long a vacation-home haven for celebrities and executives, might come to mind as the one place in Colorado with the biggest chasm in income. But another county has an even larger divide between the rich and everyone else.

The sparsely populated county northeast of the Great Sand Dunes National Park ranked fifth for its income gap among 3,064 U.S. counties examined by the Keystone Research Center in Harrisburg, Pa., which conducted the study for Washington-based EPI.

The top 1 percent of tax filers in Custer County reported 47 percent of the income in the county, a remarkable concentration by any measure.

“It is a poor community that has happened to tap into some high-income individuals,” said Keystone labor economist Mark Price, a co-author of the study.

Robin Young, director of the Custer County Extension Office, called the $3 million average for the top 1 percent surprising. Young said she makes a point of getting to know potential donors in her work with area nonprofits and if there are multimillionaires, they are flying under the radar.

“We have wealthy people who live in our community,” Young said. “There aren’t a whole lot of them, and I am familiar with most.”

By contrast, Pitkin County is an affluent county with some ultra-rich households. The top 1 percent averaged a higher $5.3 million in income, but the remaining 99 percent of households had an average income of $76,921, second only in the state to Douglas County.

Pitkin County’s inequality ratio was 68.8, which ranked ninth-highest in the country. Glenwood Springs had the ninth-highest income gap in the country among 916 cities at 42.4, while Sterling surprisingly has the 21st-highest ratio at 32.5.

Despite having two counties in the top 10 nationally and two cities in the top 25 for income inequality, Colorado ranked only 21st among states for its income disparity.

Michael Reaves, The Denver Post

Genna Ingram holds a sheep as they moved in livestock for the Custer County Fair on July 13, 2016. Custer County ranked fifth for its income gap out of 3,064 U.S. counties examined by the Keystone Research Center in Harrisburg, Pa.

Nationally, the top 1 percent of earners, as measured by 2013 tax returns, averaged incomes that were 25.3 times higher than what the remaining 99 percent averaged. In Colorado, the gap was 20.1 times.

Some caveats are in order, Price said. The data didn’t include government transfer payments, which pushes down the average income for the 99 percent in places with a higher share of people receiving social assistance or collecting social security. And the average income for the 1 percent is before taxes, which overstates what they actually had available to spend or invest.

Some 1 percent households live off inherited wealth, but they are an exception. A large share consist of corporate executives or financiers, Price said, and that kind of work tends to concentrate in large cities.

Denver and Boulder rank eighth and ninth among Colorado counties in terms of income disparity. In Denver, the top 1 percent of households averaged $1.5 million in income, while the remaining 99 percent averaged $52,503, which works out to a ratio of 29.1.

In Boulder, the top 1 percent averaged incomes of $1.7 million, while the remaining households averaged a much higher $68,890, resulting in a lower ratio of 24.9, which is on par with the national average.

Rural areas are harder to decipher. In most places, limited job and business opportunities mean everyone makes less money. But resorts areas, with their pricey vacation homes, have some of the largest income gaps in the country.

Just because someone owns a second home in the mountains doesn’t mean that is the address listed on their tax returns. But the study seems to indicate that many high-income households are calling those locations home.

San Miguel County, home to Telluride, ranks third in Colorado with a 46.2 income disparity ratio. Routt, home to Steamboat Springs, is 5th with a 29.8 ratio, while Eagle, home to Vail, comes in 6th with a 29.6 ratio.

Outside of resort areas, large land holdings are what tend to generate higher incomes in rural areas, said Stephen Weiler, a Colorado State University economics professor who specializes in rural and regional development.

But he cautioned that in sparsely populated counties, a handful of high-income households can drive up the ratio, given the limited income opportunities available to everyone else.

“What is eye-popping is the top 1 percent of income, but the other 99 percent is important, and it is important to understand why their income is so low,” he said.

In Custer, Price said about two dozen households are in the top 1 percent, but even within that group there is a wide range. While $406,558 gets you in the door, the average for the group is closer to $3 million, meaning a handful of high-powered earners have made the area home.

“They have made their money in other places,” confirmed Elizabeth Watson, a co-owner of Watson Land Co. in Westcliffe, which is an hour drive from the nearest traffic light.

Custer County, Watson said, is becoming an alternative to more expensive locales such as Vail or Aspen for some well-off buyers.

Some own ranches, but ranching isn’t the way they make their money, adds Caroline Abraham, Watson’s business partner. Nor is there a need to prove they have arrived or impress others, which reduces the social friction found in some places.

“People are friendly here and look out for one another. Everybody is pretty even keeled,” Abraham said. “We keep saying we are one movie star away from being ruined.”

State demographer Elizabeth Garner said Custer County is becoming more popular with retirees, which may explain some of the income gap.

“It is a retirement county — lots of folks with low incomes because they are retirees, a few super wealthy,” she said.

After Custer County, the next biggest Colorado surprise in the study was Logan County, which ranked fourth with an income gap of 32.5 and Kit Carson ninth at 24.8. Sterling ranked second only to Glenwood Springs in terms of its income inequality.

Logan County counts on agricultural production, mostly cattle, for about half its economic output and is home to several feed lots owned by individuals rather than big corporations, said Trae Miller, the county’s economic development director.

A big year for cattle prices was 2013, and landowners with mineral rights saw a bump up in oil and gas royalty income, with some also collecting rent from wind farms.

Decades ago, Sterling had a country club that highlighted the divide between the haves and have nots, Miller said. That formerly exclusive facility is now a public venue where everyone rubs shoulders.

Flipping the equation around, Colorado’s most egalitarian counties, with an income ratio of under 10, were Dolores, Rio Blanco, Adams, Lincoln, Conejos and Crowley, in that order.

“If the disparity is planned for and managed and people still have a voice then the inequality doesn’t create as many problems,” Garner said.

Inequality has always existed, but the concern is that it continues to widen with more money going to those who already make the most. Before 1980, the top 1 percent of households in Colorado captured 6 percent of income gains. After 1980, they have captured 59 percent of income growth, according to the study.

The ratio between the income of the 1 percent and the 99 percent in the U.S. is now at highs not seen since the 1920s, Price said. That period didn’t end well for rich, poor and everyone in between.

Presidential candidates from both parties are tapping into the deep frustrations many voters feel regarding an inability to get ahead. The country needs to find ways to restore balance in a way that avoid the trauma of the “great reset” that occurred in the 1930s, Price said.

Aldo Svaldi has worked at The Denver Post since 2000. His coverage areas have included residential real estate, economic development and the Colorado economy. He's also worked for Financial Times Energy, the Denver Business Journal and Arab News.

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